Diplomats and other observers in Libya say that with elections one month away, the National Transitional Council is struggling to exert control over various militia prominent in the uprising against Moammar Gadhafi. The situation is further complicated by tribal rivalries and a growing presence of Islamist militants in some areas.

One source briefed by Western intelligence officials says of particular concern is the city of Derna on the Mediterranean coast some 160 miles (300 kilometers) west of the Egyptian border. The source tells CNN that hundreds of Islamist militants are present in and around the town, and there are camps where weapons and physical training are provided to militants. He said one official had described the area as "a disaster zone."

Tensions have grown between local people and the militants. Last month, a number of Derna residents went to a camp on the outskirts of the city, according to the source, and forced militants to leave.

There have been a number of car bomb explosions in Derna in recent months, apparently as rival Islamist factions compete for supremacy in the area. One is said to have targeted Abdel Hakim al Hasadi, a former member of the Libyan Islamic Fighting Group (LIFG) who spent time in Afghanistan in the 1990s. He told reporters last year he had been handed over to the Americans and sent back to Libya, where he was jailed for six years. The LIFG formally repudiated al Qaeda in 2009 and disbanded shortly afterwards.

The source said that groups sympathetic to al Qaeda as well as former members of the Libyan Islamic Fighting Group had converged on Derna – and the presence of one man was especially worrying: senior al Qaeda operative Abdul Basit Azuz. He had been sent to the area last spring by al Qaeda leader Ayman al-Zawahiri and now had some 300 men under his command. Azuz is operating at least one training facility and has sent some of his men to establish contact with other militant Islamist groups as far west as Brega, the source said.

Al-Zawahiri’s plan was for him to establish a "home base for al Qaeda" in Libya, the source said.

A senior counter-terrorism official told CNN that western intelligence is aware of Azuz’s presence, his recruitment and training of fighters, and believes his redeployment to Libya had the backing of al-Zawahiri.

The official said it was unclear whether former LIFG militants were contesting Azuz’z presence in Derna. It was possible, he said, that al Qaeda had grown strong enough in the area to deter such a confrontation.

The threat to Western security posed by al Qaeda in eastern Libya was mainly “over-the-horizon” according to the official - but had the potential to become significant because of Libya’s proximity to Europe.

Azuz has been close to al-Zawahiri since the 1980s and first traveled to Afghanistan in the early 1990s to join mujahideen fighting the Soviet occupation - as did hundreds of Arab fighters.

Azuz later moved to the UK and lived in Manchester, where he increasingly cropped up on the radar screen of British counter-terrorism services who suspected he was trying to radicalize youngsters, according to the source briefed by Western intelligence. In the period after the July 7, 2005, London bombings he was one of about a dozen Libyans held under so-called "control orders" and detained at Belmarsh high-security prison. After being released, he left the UK around 2009 for the Afghan-Pakistan border region, along with the son of another militant who was subsequently killed there.

Derna has long been associated with Islamic militancy. It was an area where the Libyan Islamic Fighting Group was strong during Gadhafi’s rule. Many of the Libyan fighters who joined al Qaeda in Iraq came from the Derna area, according to documents seized by U.S. forces in Iraq in 2006. Many returned, while other recruits never reached Iraq, making the area potentially fertile ground for al Qaeda recruitment.

In 2008, a U.S. diplomat who visited Dernah noted in a cable: "Unlike the rest of the country, sermons in eastern Libyan mosques are laced with phraseology urging worshippers to support jihad in Iraq and elsewhere through direct participation or financial contributions."

One source told CNN that the situation in the east was complicated by the presence of foreign fighters – from Algeria, Morocco and the Sahel – including some from al Qaeda in the Islamic Maghreb (AQIM.)

Al Qaeda has tried to harness the unrest in north Africa to its advantage over the past year. One senior figure in the group, Abu Yahya al-Libi, said in a video message to fellow Libyans distributed on jihadist forums last year: "At this crossroads you have found yourselves, you either choose a secular regime that pleases the greedy crocodiles of the West and for them to use it as a means to fulfill their goals, or you take a strong position and establish the religion of Allah."

The apparent growth of Islamist militancy is just one of many challenges facing post-Gadhafi Libya, as it prepares for elections. Different militia remain influential players and have not been disarmed. Last week there was a gun battle in Tripoli close to the prime minister’s office. The special UN envoy to Libya, Ian Martin, has expressed concern over prisons run by militia that hold an estimated 4,000 detainees alleged to have been Gadhafi supporters.

Online Public Information File

Viewers with disabilities can get assistance accessing this station's FCC Public Inspection File by contacting the station with the information listed below. Questions or concerns relating to the accessibility of the FCC's online public file system should be directed to the FCC at 888-225-5322, 888-835-5322 (TTY), or fccinfo@fcc.gov.